We must have government banking because of the panics of the nineteenth century. We must have government health care because of the illnesses of the twentieth century. We must have government gun ownership because of the shootings of the twenty-first century.

Following tragedies, people seem to systematically wish to be dominated by authorities, to surrender their own freedom and rob others of theirs. Why?

We always have a layer of authority-worship ready to pop out, illustrated most memorably by Stanley Milgram's infamous experiment: volunteers kept administering what they thought were electrical shocks to actors who feigned cries of pain, past what would appear to be the point of safety – solely because a guy in a white lab coat told them to. The bias has been used, for example, to attempt to explain high CEO pay, or the willingness of otherwise ordinary people to torture and murder innocents simply because a guy in a uniform told them to.

Indeed, Milgram began his experiments around the time of the Nazi trials, motivated by the issues they brought up. And the appeal of authority has not faded over the past seven decades. People still "just follow orders," even when it means violating innocents. Just look at the TSA today.

Horrible as the appeal to authority is, and though it is related to the cower-to-power effect, it doesn't fully explain our tendency after crises to want to further strengthen an already centralized force.

It's not that the government commands us to give up our freedom and we acquiesce. It's worse. Many of us beg to be dominated.

This tendency to kowtow can't be merely an appeal to authority, because in the wake of tragedies Democrats do not support giving more power to Republicans, nor does the reverse occur, no matter which party is in the majority. On the contrary, devastating events tend to polarize people into supporting "their" respective parties, even if there are no meaningful differences between the major parties. So it's not simply placating whoever is in power, though that is part of it; it is about something more.

It seems to be more of an instinct to centralize, to manage the situation, to lock everybody down, to tell people what to do and how to do it so it can't happen again. This instinct is the illusion of control.

The illusion was first documented in 1975 by psychologist Ellen Langer. The title of one of her articles explains it best: "Heads I Win, Tails It's Chance." In other words, if I win, it is because I am skillful and smart and handsome. If I lose, it is just bad luck.

Such thinking is pervasive among gamblers, though not usually successful ones. It also has strong and negative consequences in medicine: One potential problem of too many screening tests is that patients and doctors feel an irresistible urge to act, to do something, even after fallible tests that produce false positives on a consistent statistical basis.

Is the illusion of control bad? Sometimes it can be good, or at least fun, such as a sports fan wearing his favorite jersey to help his team win, even when watching a prerecorded game played thousands of miles away.

But research over the past few decades extending Langer's work has shown the illusion has downsides. It can impede learning and even the desire to learn, because we ignore evidence against us. It can cause us to take greater-than-justified risks. And it can cause us to continue or even escalate a failing course of action. Are those really things we want to happen to us with our health, our money, or our safety?

We can try to de-bias those who want their side of the government duopoly to gain control with a thought experiment. Ask them: in four or eight years, do you really want that evil other party controlling weapons, medicine, and money? If not, then it shouldn't be in the government's power to make that decision.

Sometimes such hypotheticals work. But sometimes they don't. The best prevention is to eliminate the option. If government didn't have the power to take away liberties, the bias to surrender would have no effect.

The little known side note to Milgram's experiment is this: Philip Zimbardo, perhaps the world's foremost expert on evil and its causes, asked Milgram about his refusing participants, the ones in the minority who declined to administer the final, seemingly deadly, electric shocks. How many of them, Zimbardo asked, objected to the entire experiment? How many of them insisted the experiment be terminated? How many even left the room without permission to check on the person in pain?

You probably guessed the answer: None. Would you have done any differently if you were one of Milgram's subjects? Are you doing anything differently today?

Without the constitution to support our Constitution, the government's long, painful experiments on us will not stop. It will continue to exploit crisis after crisis to further centralize control of drugs, guns, banks, food, energy, and everything else. Instead of objecting, many of us will be begging for more.

Philip Maymin is an Assistant Professor of Finance and Risk Engineering at NYU-Polytechnic Institute.

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Comments (10)

By the way, if my industry had caused the near collapse of the world wide economy because of fraud and greed I would be mortified if I had anything to do with it or not. Everyone in the industry knew this type of thing was going on. But yet we see that people will do anything to avoid taking responsibility for their horrible behavior.
This isn't directed to anyone, just an observation by an ordinary American, with traditional morals and values.

Posted by tiffany1 | Friday, January 25 2013 at 8:19PM ET

BankerBud--thanks for the reply. I'm not stereotyping the industry and I don't lump all banks in one basket. From what I understand the smaller community banks largely were not a part of the over leveraging and rampant fraud that nearly brought the world economy to a standstill. If I recall correctly, it's because they didn't securitize the loans they made, but rather kept them on their books. I.E. they had skin in the game--which was my original point. In addition to the big guys, there were smaller regionals who were also over leveraged and part of the problem. Unfortunately a few bad apples spoiled it for all. I personally think that Dodd-Frank didn't go far enough--but that's just my opinion. Bottom line is the premise of this article is faulty and I will always point out and dismiss absolutest, nonsensical arguments. Because we can't make things perfect we should just stop trying. With that logic, why shower? I'm just going to get dirty again. Why make the bed? I'm just going to get back in it tonight when I go to sleep. Exactly, this is overly simplistic reasoning, something that you would expect from a child not an adult.

Posted by tiffany1 | Friday, January 25 2013 at 5:25PM ET

Thanks for the kind post tiffany. I believe that the banks you refer to are mainly the Wall St. guys and Uber-size banks like BofA and Wells or do you lap your local community bank in there as well? Are all hired bankers just greedy jerks bent on your personal destruction or do you think that perhaps you are stereotyping an industry where most of us are honest, hard-working people who mainly live in small local communities. Do you think we all deserve to be cast in the same light? Thanks for your concern.

Posted by BankerBud | Friday, January 25 2013 at 4:17PM ET

BankerBud, I for one applaud when banks tightened credit. It's too bad that it takes a government to mandate to make banking industry act responsibly. The problem is that bankers have NO skin in this game. You scream about moral hazard in regards to the consumer and then proceed to act in way that only benefits you, and by you I mean the bankers personally. I for one don't want to hear anything the industry has to say about regulations. You do not speak from a place of intellectual honesty. One more thing, just because a law doesn't completely solve a problem doesn't mean that it isn't of value. This binary premise is illogical.

Posted by tiffany1 | Thursday, January 24 2013 at 9:56PM ET

Some of the other posters here are mixing well-reasoned regulation with knee-jerk responses. I don't think anyone opposes well-thought and well-debated legislation. The problem is that after a crisis, the emotional response is "do something. do anything." Later, when we realize how bad the legislation is, rather than repeal, we issue more legislation to "correct" the problem. Half the time it makes it worse. The other hypocrisy is the people that call the most for extreme regulations also are the same ones that complain when banks tighten credit. Really? Did you expect any different? People should learn to take a timeout and think before they act. I'm pretty sure that's advice most moms gave when they were young. Seems applicable today.

Posted by BankerBud | Thursday, January 24 2013 at 8:31PM ET

Good commentary and perspective. No matter what the law, a law should always address the primary purpose for its creation. As the writer indicates, so far most of the recent ideas floated by either side of the political machines do not solve the actual problems everyone fears or even alleviate them. In some cases it could easily be argued that these potential laws and regulations will provide a more susceptible pool of future victims through false securities and inadvertently cause more harm than good. Laws of any kind whose results are for its citizens only to "feel good" are only laws for the sake of laws or vehicles to pad on paybacks to the political constituents of choice. Government should be fully accountable to its results or constrained to its existing role. The hard part during any crisis is to stop, try and look through the emotions and hype, and act in the most effective means. If a proposed law seems to be a "feel good" law we need to take the time to inform our elected leaders that we expect real measurable results and we will hold them accountable come election time. Then vote... every election.

Posted by pcnee | Thursday, January 24 2013 at 6:02PM ET

Seriously, we need government banks because of something that happened in the 19th century? Did you forget that because of the rampant fraud in banking the U.S. and world economies nearly collapsed in 2008? Your premise is ridiculous. I'm sorry but regulating banks has nothing to do with taking anyone's freedom. On the contrary, banking regulations keep the American people free from the consequences of the industry's risky behavior. Why should the world suffer in order for you and your banking cohorts to make more money? This article proves why people hate banks. Your opinions are very clearly outside of what the American people think. Sorry but you are wrong. And if you and your banking cohorts had any sort of moral compass, the banking crisis wouldn't have happened. Clearly, you need some rules. Fool me once, shame on you...And don't get me started about healthcare or guns.

Posted by tiffany1 | Thursday, January 24 2013 at 5:47PM ET

Dodd-Frank wasn't so much a knee-jerk reaction to the crisis as an attempt to cover up and double down. The more stable periods have been characterized by faux regulation and stealth market discipline.

Posted by kvillani | Thursday, January 24 2013 at 5:24PM ET

Thank you Philip for summarizing the polarizing environment we all face today. I can't tell you how many debates I have witnessed or particpated in since the most recent shooting tragedy with respect to gun control. Do we think with a broad stroke of the pen this can be 'fixed'? As you succinctly point out the issue ultimately becomes submission to fear -- pick your poison! Guns, Drugs, or Banks! Why are you who push radical change against the principles upon which our country was founded so willing to give up my individual rights along with yours? To a higher power? A higher power or government judged by whom to be honest and just? Yes, it is 2013 and we continue evolve as a society and a race, but our fundamental human traits have not changed that much. We should not forget the past unless we would like to relive it.

Posted by Bradyiac | Thursday, January 24 2013 at 5:17PM ET

This piece is an example of Government bashing without regard to the fact that government responds to the will of (hopefully) us. This fellow wants to castrate government, which in effect does the same to us. Though government like people is imperfect, and ditto even the constitution, eliminating it's power to impinge on each person's absolute freedom exposes everyone to the legalized crime of the indecent few. As long as you have bad actors peddling automatic weapons with giant clips, meth, or predatory loans, people whose lives are impacted need government for reasonable protection. Regulation is justas much your free 1 percenter calling the cops when a buglar has trampled their sacred "property rights?" Common sense says some regulation is good... be it restricting clip size of guns while still allowing guns, relaxing laws on pot but not meth, or imposing Dodd-Frank instead of nationalizing the banks that almost destroyed the world economy and who deserved much worse than they've got from this government.

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